The war in Ukraine could destroy the European car industry: the most important decisions

The crisis in Ukraine has disrupted some car assembly plants and forced companies to suspend deliveries to Russia.

Russia’s invasion of Ukraine is causing waves in the automotive supply chain. The attack also prompted companies to halt shipments to Russia or suspend operations there.

Here are some of the effects on the automotive industry:

European production is running out of steam

German automakers warn of several production losses

The association of German car manufacturers VDA said the repercussions of the Russian invasion of Ukraine have disrupted transport routes, as well as financial transactions, and that it is preparing for the lack of a range of raw materials. . He said the impact of the conflict on shipping, rail and air transport has exacerbated supply chain problems at a time when inventory levels were already low.

The Volkswagen Group is deeply affected by the war between Russia and Ukraine

Volkswagen has anticipated a production halt at its Wolfsburg plant as the supply situation for key parts, such as wiring harnesses, deteriorates. Porsche, Audi, BMW and Mercedes-Benz are also reducing production in Germany.

Audi will reduce German production due to the crisis in Ukraine. Production of the A4 and A5 models at Audi’s plant in Ingolstadt, Germany will be suspended from March 7 to 11. In Neckarsulm, the production of the A6 and A7 models will be interrupted from March 7 to 18.

Porsche halts production at its Leipzig plant, which builds Macan and Panamera, as conflict in Ukraine disrupts its supply chain.

The Volkswagen Group has joined the exodus of Russian companies, suspending exports and local production in the country in response to its invasion of Ukraine. This decision affects the production of VW and Skoda models.

Volkswagen will halt production this week at two German electric vehicle factories after the Russian invasion of Ukraine hit component deliveries. Production of VW, Audi and Cupra battery-powered compact electric cars built on the VW Group’s MEB platform will be affected.

Mercedes and BMW must stop production

Mercedes-Benz plans to cut production at some of its European factories, but will work to avoid complete production shutdowns.

BMW is halting production at its factories in Germany and the UK due to supply shortages.

Stellantis prepares for a difficult year

Stellantis CEO Carlos Tavares called on US and European officials to cut steel protection tariffs as commodity and energy prices rise.

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Additionally, Stellantis has set up two task forces to deal with the effects of the Russian invasion of Ukraine. One is to monitor the sanctions imposed on Russia by the United States and its Western allies. The other follows the staff of the Ukrainian automaker.

Jaguar and Aston Martin halt Russian deliveries

British automakers Jaguar Land Rover and Aston Martin have cut off supplies from Russia as war-related sanctions in Ukraine have created growing trade barriers for the auto industry.

Volvo, GM, VW and Daimler Truck suspend deliveries to Russia

Volvo said it would suspend car deliveries to the Russian market until further notice, while Volkswagen temporarily suspended deliveries to local car dealers already in Russia. Daimler Truck also said it would freeze its business activities in Russia with immediate effect, including cooperation with Russian truckmaker Kamaz.

Renault shares are hurt by concerns over the automaker’s exposure to Russia

Renault is the most exposed European automaker in Russia, with the company’s shares falling to their lowest level since November 2020 as countries around the world step up measures to penalize President Vladimir Putin for invading Ukraine .

The company’s shares fell 11% on the Paris stock exchange on Tuesday, lowering its market valuation to less than 7.5 billion euros for the first time in nearly 16 months. Shares have fallen 37% since Feb. 16.

Russia is Renault’s second largest market, with the automaker generating around 5 billion euros a year, or about 12% of its automotive revenue, according to Bloomberg Intelligence.

Car production in Europe collapses due to lack of materials

Automakers including Volkswagen, BMW and Porsche are struggling to secure crucial wiring as suppliers in western Ukraine have been grounded by the Russian invasion, forcing production to halt at factories German cars.

Delivery traffic jams have already hit some Volkswagen assembly plants, including its Wolfsburg plant and its German electric vehicle plants, while Porsche has suspended production at its Leipzig plant.

BMW is forced to stop production of BMW and Mini cars at its German and European factories.

The main supplier, Leoni, has formed a task force to deal with the supply disruption of cable harnesses produced in Ukraine, which has led German carmakers to reduce or stop production.

Russia’s invasion of Ukraine is driving up the price of scrap metals, from aluminum in car bodies to palladium in catalytic converters and high-grade nickel in electric vehicle batteries.

Automotive technology provider Aptiv moved high-volume vehicle parts production from Ukraine in the past two months ahead of possible hostilities, CEO Kevin Clark said.

Chinese automakers could benefit as rivals leave Russia

Chinese automakers operating in Russia, including Haval, Chery and Geely in the Great Wall, have the potential to gain market share, analysts said.

They could benefit Russia after global brands stopped exporting to the country and halted production at their Russian factories amid the crisis in Ukraine. Chinese operating in Russia have so far remained silent on whether they will continue to do business in the country. Russia has become a major market for Chinese brands, including Great Wall Haval, as well as Chery and Geely, mainly for SUV sales.

“If U.S. and European Union sanctions against Russia remain in place for an extended period and U.S. and European automakers are effectively banned from doing business in Russia, Chinese automakers could gain share market in Russia. said Eunice Lee, a senior analyst who focuses on Asian cars at Bernstein Bank.

China has yet to impose sanctions on Russia, allowing its business to continue operating.

Toyota, Nissan, Hyundai and Honda cease operations in Russia

Toyota will halt production at its plant in Russia, while vehicle imports into the country have also been suspended indefinitely due to supply chain disruptions. Toyota is the best-selling Japanese brand in Russia.

Nissan has suspended vehicle exports to Russia due to logistical challenges from the conflict in Ukraine. Meanwhile, Russia’s biggest automaker AvtoVAZ will close its Togliatti and Izhevsk plants from Saturday March 9-11 as it faces a supply crisis for electronic components.

Honda Motor Co. is halting car and motorcycle exports to Russia, joining a growing number of global companies choosing not to do business in the country following its invasion of Ukraine.

Hyundai said it has not decided when it will resume operations at its factory in St. Petersburg, Russia, citing continuing problems with component delivery.